Readers’ forum: Capital allowance treatment on plant and machinery

Capital allowances

We have a sole trader client who is about to incorporate their business and is concerned about the potential capital allowance treatment on plant and machinery and successions.

This was the subject of an enquiry in Readers’ forum query 19 271 ‘Hanging in the balance’ (Taxation 18 November 2018) where it appears that if the plant and machinery is actually sold this will preclude an election under CA 2001 s 266 because of s 265(3)(b) where mention is made of ‘and without being sold’ – although what is being sold in this sub-section is unclear. This begs the question of what is the point of s 266(3) which notes ‘the election may be made whether or not any plant or machinery has actually been sold or transferred’?

For our sole trader the plant and machinery cost £185 000 and has a tax...